PGC fund in land buy

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An investment fund managed by takeover target Pyne Gould Corporation (PGC) has secretly swooped on $40 million worth of properties in the Queenstown and Wanaka areas as PGC shareholders mull an offer from director George Kerr and US hedge fund Baker St Capital.

NZX-listed PGC looks set to become one of the biggest players in the Queenstown and Wanaka residential property markets after an investment fund in its wealth management division bought large tracts of land at the Jack's Point and Henley Downs developments.

The land has been acquired by various entities owned by Torchlight (GP) 1 Ltd, part of Torchlight Group which is chaired by PGC shareholder and director George Kerr, who last month teamed with Baker St Capital to make a controversial takeover offer for PGC.

Torchlight was briefly in the news last year when it was announced it had raised $150m from investors, but it does not publish its accounts and its activities are shrouded in secrecy.

Last week Torchlight was again in the news when PGC's chairman Bryan Mogridge announced he was stepping down from that role and resigning as a director of Torchlight, as controversy over Kerr's takeover plans intensified.

Details of Torchlight's Queenstown deals came to light after a mysterious new investor acquired a 27% stake in Torchlight (GP) 1.

That move required Overseas Investment Office approval, but when the OIO released its decision approving the deal, both the OIO and Torchlight went to considerable lengths to prevent the details being made public. The identity of the new investor, the name of the Torchlight fund, and the cost of the investment were all withheld on grounds of commercial sensitivity, in spite of the considerable and legitimate public interest in PGC's affairs.

However, records obtained by the Sunday Star-Times show that several subsidiaries of Torchlight (GP) 1 paid nearly $40m for 202ha of land in the Queenstown and Wanaka districts last year.

That includes 63ha of vacant residential land at Jack's Point, a subdivision project near the Kawarau Falls hotel development on the shores of Lake Wakatipu. Included was the Jacks Point Clubhouse, a restaurant and bar complex in the development.

Another 139ha of land in the Henley Downs development at Wanaka was purchased about the same time. The properties have combined rating valuations of $35.5m.

Both sets of land were purchased from companies which formed part of the property empire of Queenstown-based developer John Darby, a close business associate of Kerr.

In its application to allow the new investor to take its 27% stake, Torchlight said the transaction would provide additional capital for the ongoing residential development at both the Jack's Point and Henley Downs sites.